Flashcards
Unit 2A- Topic four- Stock control and lean management
Cards in this deck (16)
- 1Stock and stock controlStock is a term used to cover everything from raw materials through work in progress to fully finished products that the business is holding.
Stock control is the process of making sure that the optimum level of stock is held so that demand can be met while keeping the costs of holding that stock to a minimum. - 2Too much stock-Increased cost of handling and storing stock.
-Too much cash tied up in stock.
-Cash flow problems may occur. - 3Too little stock-Production may be halted as stock runs out.
-Workers and machines may lie idle.
-Cannot meet orders and lose reputation. - 4Stock control chart
- 5How stock control chart works-Production takes place, stock is used and stock level falls.
-Stock levels monitored, when reach certain level more supplies ordered, this is the reorder level.
-Production continues and stock levels fall to a minimum level.
-New supplies arrive and stock levels are replenished and the pattern repeats itself.
-The minimum stock level is set so that there is still a small amount of emergency stock (buffer stock) left if delivery is delayed. - 6Lean management-A general term given to any system of production that tries to minimise waste during the production process. This helps to cut costs.
-It embodies a flexible approach which sets out to eliminate waste and work on the principle of continuous improvement. Every employee needs to be part of a team that sets out to better organise the production process and product improvements, and also requires excellent communication. - 7Lean production: Advantages and disadvantagesAdvantages:
-Reduces wastage and related costs.
-Reduces costs of storage and handling.
-Improves quality.
-Shorter lead times.
-Customers more satisfied with quality.
Disadvantages:
-Does not suit all production processes.
-Failure by one small supplier can halt entire production process.
-Workers may dislike greater responsibility.
-Managers and staff may not be flexible enough. - 8Just in time stock control chart
- 9Just in time-A stock control system that does away with the need to hold large quantities of stocks or raw materials. Stocks arrive as and when they are needed.
Involves having:
-Frequent deliveries of small quantities of supplies.
-Building close relationships between suppliers and producers.
-No longer necessary to hold large reserves of stocks which are expensive to purchase and store.
-Production costs reduced which increases competitiveness. - 10Just in time: Advantages and disadvantagesAdvantages:
-Reduced costs in terms of buffer stocks and handling.
-Less need for storage space which can be converted to production.
-Greater flexibility in responding to changes in demand.
Disadvantages:
-May not benefit from reduced unit costs for bulk purchases.
-If there is a break in supply, production will be lost, time and money may be wasted.
-Heavy reliance on reliability of supplier. - 11Kanban-The idea that production takes place only after a customer has placed an order. Production is pulled through an assembly line as the order is received. It removes the need for a stockpile of finished goods ready for sale.
-It goes hand in hand with JIT.
-All output will generate sales revenue and costs are minimised. - 12Other aspects of lean production-Include team working (sometimes called cell production), TQM and job enrichment and empowerment. These focus on the management of human resources, including ways of motivating employees and providing the impetus of continuous improvement. These approaches fit well with democratic leadership.
- 13Competitive advantage of short product development lead times-Product development lead time starts from the first idea about the product, through the design and development period, to being ready to start selling the final product.
-Time based management is based on saving time wherever possible.
Selling the product means being able to respond faster than competing businesses. This applies to:
-Speed of development- If business responds quickly when market demand changes, its market is likely to grow. The shorter the product development lead time, the faster the new product can get to market.
-Speed of delivery- businesses that can expand output in response to unexpected new orders quickly and efficiently will get more customers.
-Flexibility in the use of both capital and labour can make short production runs possible. Where capital equipment can be used to produce range of differentiated products, business will be able to adapt easily to market change. Where labour is multi skilled and willing to switch jobs when necessary, adaptability will be even greater. - 14Short production runs-Means that few products will fail to sell because the business can cease production as soon as a downturn of demand is observed.
- 15Short production lead times: Benefits-Reduces the development time in the product life cycle.
-Reduces costs.
-Improves cash flow.
-Can respond rapidly to changes in consumer tastes and demand.
-Can enter the market before competitors can.
All of which gives a business a competitive advantage, but does require that capital equipment, labour and management are flexible enough to do this. - 16The most appropriate way to produce a product or provide a serviceMuch depends on the nature of the product or service itself and the market conditions the business is operating in.
-Some products can only be made using high tech machinery.
-Others will need to be capital intensive in order to achieve economies of scale.
-Some will depend upon labour intensive production as part of their appeal.
-If the cost of labour is cheap, more will be used, if wages are high machines may be substituted.
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- A2 level Business unit 2A Flashcards on Unit 2A- Topic four- Stock control and lean management, created by han.smith98 on 01/06/2015.
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